IBM revenue misses as server, software sales slow

(Reuters) – IBM Corp reported a bigger-than-expected drop in revenue on Tuesday, hit by slowing software sales and wavering demand for mainframe servers, pointing to a bumpy recovery for the technology services giant that is in the midst of a turnaround. FILE PHOTO: A logo of IBM is seen at the Mobile World Congress in Barcelona, Spain February 28, 2018. REUTERS/Yves Herman/File Photo Chief Executive Officer Ginni Rometty has been refocusing International Business Machines Corp toward faster-growing cloud and analytics services to lower dependence on its traditional hardware products and reverse years of revenue declines. The Armonk, New York-based company’s overall revenue slipped 2 percent in the third quarter ended September, with almost all of its businesses missing Wall Street’s revenue estimates. Revenue at its systems unit, which includes mainframe servers and data storage systems sold to large organizations, climbed only 1 percent, compared with a 25 percent jump in the previous quarter. Sales growth of z14 mainframe servers, introduced about a year ago, have slowed as customers await the launch of new machines before they upgrade. IBM’s cognitive software business, which houses artificial intelligence platform Watson, analytics and cybersecurity services, had sales of $4.15 billion, down 6 percent from a year earlier. Seasonal factors affecting demand for software such as transaction processing platforms hurt revenue, IBM Chief Financial Officer James Kavanaugh said in an interview, adding that there were signs demand was recovering. “We have a good pipeline in transaction processing software as we enter the fourth quarter,” he… [Read full story]